Which of the following are the primary uses of funds of Insurance Company?

• A) Mortgages, Consumer loans, Business loans
• B) Commercial paper, Bonds, Mortgages
• C) Cash, loans, securities
• D) Corporate bonds, Government bonds

The means for assuring accountability and transparency:

• A) Are the same for all successful central banks
• B) Are different across the central banks of most countries
• C) Involve setting specific numerical targets so there is no confusion as to what the goal is.
• D) All of the given options

A bank can usually offer a saver a higher return for the same risk because:

• A) The bank can pool the resources of larger savers and purchase lower denominated assets
• B) Economies of scale can be applied by the bank in its purchase of assets
• C) The bank can usually purchase assets at a higher cost than any one saver
• D) None of the given options

Why banks do not prefer to manage the deposit withdrawals by adjusting the asset side of the balance sheet?

• A) It reduces bank size, as smaller the balance sheet, lower will be the profit.
• B) To refuse to renew a customer loan is not possible for banks.
• C) It increases the size of the bank but reduces the profits in long run.
• D) Asset adjustment is more costly and time consuming.

Which of the following are the primary uses of funds of Finance Company?

• A) Cash, loans, securities
• B) Corporate bonds, Government bonds
• C) Commercial paper, Bonds, Mortgages
• D) Bonds, Bank loans, Commercial paper

If risk premium on equity increases, what will be effect on stock price?

• A) Price may increase or decrease
• B) It will increase
• C) It will constant
• D) It will decrease

Return on Assets indicates:

• A) Ratio of profit with assets
• B) Profitability and net worth
• C) Required rate of return
• D) Ratio of revenue with assets

Financial institutions and financial markets are engaged in:

• A) Flow of huge quantities of money
• B) Affect the types of production of good and services in the company
• C) Affect profitability of firms
• D) All of the given options

Which one of the following method is not included in credit risk analysis?

• A) Screen loan application
• B) Check borrower’s credit history
• C) Use interest rate swaps
• D) Demand of collateral

Your friend says that price of ABC (Ltd) stock reflects all available information. It describes:

• A) Expected hypothesis
• B) Theory of efficient markets
• C) All of the given options
• D) Liquidity premium theory

Improvements in technology leads markets work efficient and reduce--------.

• A) Moral hazard
• B) Adverse selection
• C) All of the given options
• D) Asymmetry information

The fact that a financial intermediary can use the same contract for many customers is an example of:

• A) The Law of Increasing Opportunity Cost
• B) Economies of Scale
• C) Economies of Scope
• D) The Law of Diminishing Marginal Returns

Which of the following methods of financing need a channel to work efficiently?

• A) Indirect financing
• B) Direct financing
• C) Operating finance
• D) Working capital finance

A typical bank will offer ________ type/s of checking accounts.

• A) Six or more types
• B) Only one type
• C) Two types
• D) Four types

In our daily life, which of the following financial intermediary is used excessively?

• A) Credit union
• B) Pension fund
• C) Commercial bank
• D) Investment bank

Risk and leverage have such relationship that if one variable increases other variable will have to----.

• A) Decrease
• B) Increase
• C) Remain constant
• D) Ignore

Bubbles in Stock market occur owing to investor------

• A) Willingness
• B) Psychology
• C) Lquidity level
• D) Risk-averse behavior

Stock market bubbles can lead to:

• A) Patterns of volatile returns from the stock market
• B) An inefficient allocation of resources
• C) All of the given options
• D) Stock market crashes

Which one of the following is NOT true for gap analysis?

• A) It is the difference in the maturity of assets and liabilities
• B) It is a formal study of what a business is doing currently and where it wants to go in the future
• C) Banks manages credit risk by using gap analysis
• D) It is the difference between the yield on interest sensitive assets and liabilities

If information in a financial market is asymmetric, this means:

• A) Borrowers and lenders have the same information
• B) Borrowers would have more information than lenders
• C) Lenders lack any information
• D) Borrowers and lenders have perfect information